The Political Game: One vote against an EA Take-Two takeover
by Dennis McCauley 
{ Apr 22nd 2008 at 2:58PM }
Each week Dennis McCauley contributes The Political Game, a column on the collision of politics and video games:
Unless you've been watching Grand Theft Auto IV trailers nonstop for the last few weeks, you probably know that game publishing giant Electronic Arts is attempting an "all your base are belong to us" maneuver on GTA series publisher Take Two interactive.
Captained by new CEO John Riccitiello, EA launched its acquisition campaign in February by offering a bonus of 60% over Take Two's then share price. T2, led by chairman Strauss Zelnick, told EA to stick it, at least until after next week's GTA IV release. EA then appealed directly to Take Two shareholders. So far, however, that strategy is not working out. EA has accumulated less than 10% of the outstanding T2 stock and has been forced to extend its deadline until May 16th.
It's unclear how this will play out, of course. But let's hope it ends badly for EA. While acquiring Take Two may line the pockets of a few fat cat investors and transform some workaday EA execs into game industry Big Swinging Dicks, there's no way in Hell that this deal is good for gamers.
Look, I'm no EA hater. And, unlike some gamers, I'm certain that they wouldn't dare tinker with the sacred cow of the deal, the GTA franchise. But what EA surely will do is consolidate its monopoly on sports games. And that means higher prices and fewer choices for gamers. And that means you lose. In fact, it was Wedbush-Morgan analyst Mike Pachter who told me that Take Two's sports games – not GTA – were driving the deal. It breaks down like this:
EA and T2 currently compete on basketball and ice hockey games. EA has an exclusive on NFL and NCAA football, while T2 has a third-party exclusive on Major League Baseball. If EA buys Take Two, the competition in basketball and hockey goes away. As Pachter told me, "By taking out all of that [competition], EA has a monopoly in sports. If these guys have a monopoly, they're not going to cut pricing on sports games as quickly. We've been seeing sports games come down [in price] before Christmas the last couple of years. That'll never happen again."
Indeed, we've been down this road before with EA, and it was a train wreck for gamers. Some Joystiq readers will recall the NFL 2K series from Visual Concepts. It was a very good pro football game franchise that originated on the Dreamcast but later migrated over to the PS2 and Xbox. Some reviewers actually came to prefer NFL 2K to EA's Madden series. What's more, Take Two, in a competitive effort to win market share in later years, priced it very aggressively ($19.99). Declining to go that low in price, EA was forced to reduce Madden to $29.99 just to stay competitive (there's that word again).
So what happened next? EA secured an exclusive license with the NFL and NFL Players Association. Quicker than a LaDainian Tomlinson sprint to the end zone, the NFL 2K series ceased to exist. The next edition of Madden, no longer facing competitive pressure from NFL 2K, jumped up in price to $49.99. EA's revenues, of course, shot up. Gamers, however, had to plunk down twenty bucks more than the previous year and lost the opportunity to choose their pro football game based on a competitive comparison of features and price. You either played Madden – at EA's price - or you went home.
Is this legal? Apparently. Is it fair? Only if you are an EA investor.
In any case, it was refreshing to learn recently that the Federal Trade Commission is taking a good hard look at potential anti-trust (i.e., monopoly) concerns in the proposed EA-T2 deal. Let's hope the FTC investigators don't forget EA's history with the Maddenopoly.
The bottom line? While I enjoy a number of EA franchises like The Sims, Command & Conquer, Battlefield, Burnout and, yes, even Madden, I cast my vote against the EA takeover.
It's a bad deal for gamers.
Dennis McCauley is the Political Editor for the Entertainment Consumers Association (www.theeca.com), tracks the political side of video games at GamePolitics.com and writes about games for the Philadelphia Inquirer. Opinions expressed in The Political Game are his own. Reach him at
Captained by new CEO John Riccitiello, EA launched its acquisition campaign in February by offering a bonus of 60% over Take Two's then share price. T2, led by chairman Strauss Zelnick, told EA to stick it, at least until after next week's GTA IV release. EA then appealed directly to Take Two shareholders. So far, however, that strategy is not working out. EA has accumulated less than 10% of the outstanding T2 stock and has been forced to extend its deadline until May 16th.
It's unclear how this will play out, of course. But let's hope it ends badly for EA. While acquiring Take Two may line the pockets of a few fat cat investors and transform some workaday EA execs into game industry Big Swinging Dicks, there's no way in Hell that this deal is good for gamers.
"What EA surely will do is consolidate its monopoly on sports games." |
Look, I'm no EA hater. And, unlike some gamers, I'm certain that they wouldn't dare tinker with the sacred cow of the deal, the GTA franchise. But what EA surely will do is consolidate its monopoly on sports games. And that means higher prices and fewer choices for gamers. And that means you lose. In fact, it was Wedbush-Morgan analyst Mike Pachter who told me that Take Two's sports games – not GTA – were driving the deal. It breaks down like this:
EA and T2 currently compete on basketball and ice hockey games. EA has an exclusive on NFL and NCAA football, while T2 has a third-party exclusive on Major League Baseball. If EA buys Take Two, the competition in basketball and hockey goes away. As Pachter told me, "By taking out all of that [competition], EA has a monopoly in sports. If these guys have a monopoly, they're not going to cut pricing on sports games as quickly. We've been seeing sports games come down [in price] before Christmas the last couple of years. That'll never happen again."
Indeed, we've been down this road before with EA, and it was a train wreck for gamers. Some Joystiq readers will recall the NFL 2K series from Visual Concepts. It was a very good pro football game franchise that originated on the Dreamcast but later migrated over to the PS2 and Xbox. Some reviewers actually came to prefer NFL 2K to EA's Madden series. What's more, Take Two, in a competitive effort to win market share in later years, priced it very aggressively ($19.99). Declining to go that low in price, EA was forced to reduce Madden to $29.99 just to stay competitive (there's that word again).
"You either played Madden – at EA's price - or you went home. " |
Is this legal? Apparently. Is it fair? Only if you are an EA investor.
In any case, it was refreshing to learn recently that the Federal Trade Commission is taking a good hard look at potential anti-trust (i.e., monopoly) concerns in the proposed EA-T2 deal. Let's hope the FTC investigators don't forget EA's history with the Maddenopoly.
The bottom line? While I enjoy a number of EA franchises like The Sims, Command & Conquer, Battlefield, Burnout and, yes, even Madden, I cast my vote against the EA takeover.
It's a bad deal for gamers.
Dennis McCauley is the Political Editor for the Entertainment Consumers Association (www.theeca.com), tracks the political side of video games at GamePolitics.com and writes about games for the Philadelphia Inquirer. Opinions expressed in The Political Game are his own. Reach him at
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Reader Comments (Page 1 of 2)
EihBeir @ Apr 22nd 2008 3:01PM
Amen.
rv @ Apr 22nd 2008 5:13PM
The sports titles are ok, but I believe you are incorrect in your presumption that gta will remain untocuhed. If they don't force rockstar to make one as fast as possible, they will probably make a developer make one each year, similar to treyarch and infinity ward.
pxdnninja @ Apr 23rd 2008 12:46AM
While I can understand a lot of this, one thing that I keep seeing that is annoying is the whole EA went after the NFL exclusive rights mentality people have picked up. That is not how it went down. The NFL, not EA, wanted only one company producing NFL titles, and was only going to allow one company (whoever would pay them the most) to do so. EA paid more than 2K, simple as that. So EA didn't seek out the rights, but they definitely were not about to give them up at the same time.
Ghen @ Apr 23rd 2008 10:14AM
both of you are guilty of bending the reply system to get your opinions to the top. for shame.
Marlos Hill @ Apr 22nd 2008 3:06PM
Seriously, i agree with everything in this article. I'd [+] you if i could.
syrik zero @ Apr 22nd 2008 3:07PM
They need to let it go. They are looking like huge douches AND turd sandwiches
Mandingo Chief @ Apr 22nd 2008 3:07PM
Let's not forget the Brain Drain that usually occurs when studios and developers are bought out. Anyone remember Rare?
Jansperus @ Apr 22nd 2008 3:53PM
I'm no licensed historian when it comes to the gamingverse, but I'm pretty sure Rare started sucking before the MS buyout, which is why Nintendo was like all "Get to steppin' bitch!"
JakubK666 (Ninja Defence Force) @ Apr 22nd 2008 3:57PM
Bullfrog...nuff' said.
Jon2309 @ Apr 22nd 2008 3:07PM
Good article.
Take-2 deserves a hell of a lot better than the tripe EA will transform them into.
Deric Lee @ Apr 22nd 2008 3:08PM
I'm still not sure how the anti-trust exemption for the NFL flows over to gaming, it just doesn't make any sence to me.
I want competition, I want better prices, I WANT A BETTER PRO FOOTBALL GAME!
Sir Fidlious Wong (Zeon Defense Force) @ Apr 22nd 2008 3:10PM
To EA, it makes sense. After all, when you have the rapidly declining mindshare of Madden (each year selling worse than the last... guess why?), why not attempt a complete sports takeover? Only Sony, as a hardware maker, is trying to maintain an exclusive sports franchise and even their attempts would fall if T2 became the a part of EA.
Interesting times for the industry to be certain. Consolidation for survival and the resurgence of independant gaming...
mksolo @ Apr 22nd 2008 3:13PM
ahem also. I love the 2k8 series of basketball and if EA took over, it would go down the drain. Last EA sports basketball that was good was 04. Competition keeps things tight.
ScottG13 @ Apr 22nd 2008 3:10PM
What about gamers who don't give two craps about sports?
We'd prefer good developers like Bethesda, Irrational and Rockstar get away from the cronyism and mismanagement of Zelnick and cohort.
Sir Fidlious Wong (Zeon Defense Force) @ Apr 22nd 2008 3:25PM
Funny, those companies are financed by the publisher. Meaning all those companies you mentioned could easily get away if they want. They just need to find a better publisher. Hey, look, there's EA.... wait, nevermind. Keep looking.
ScottG13 @ Apr 22nd 2008 3:29PM
I've been very impressed with a great deal of EA's recent publishing efforts. Army of Two anyone? Willing to hold back a disappointing title to give it more time to fix issues and it ended up selling VERY well in a "non game selling" time of year. I think Bioware and Pandemic are going to benefit from the same attitude and resources, as well.
Mr Khan @ Apr 22nd 2008 4:54PM
I would agree with Scott. EA has been turning around their perception as the "Big Business Butthole" of the industry with some impressive efforts recently, only the sports division is becoming more and more Standard-Oil-esque
The EA that funded Skate, The Orange Box, Rock Band, and others is a very agreeable EA
Now, if they were being sold to Activision, for instance, that might be worse for creativity in Take-Two's other, non-sports divisions
FOXHOUND @ Apr 22nd 2008 3:14PM
Hey now... I love my sports games, but that doesn't mean I'm a EA fanatic.
...That is unless Madden is somehow placed in a GTAIV mod, and able to be mangled by Niko. Then I'd be all for the merger, LoL.
Kamal Dhingra @ Apr 22nd 2008 3:15PM
and this is a concern NOW? No one saw this coming when they got the exclusive rights to the NFL?! Helllll-O! This was a obvious as Schwarzenegger amending the constitution to become president. Its a slow painful death. As Pachter said though, its inevitable. EA will throw a couple bucks at the FTC and the deal with go through with no anti-trust investigation.
Phranctoast @ Apr 22nd 2008 3:32PM
Arnold needs to get elected President. Just so, while campaigning for his second term, he could break out "I'll be back".
rokerij2003 @ Apr 22nd 2008 10:10PM
I play NBA 2k religiously every year
This is seriously the worst thing to happen to any fan of the game. If EA continues this series, I'll be fine, but if they kill it . . . I doubt you'll see me playing NBA Live next year.
Live is one of the worst basketball games ever made.
solidusbm @ Apr 22nd 2008 3:55PM
NBA 2K2 RIP...
at least it seems this isn't gonna happen, the investors know what GTA means, lots of money. I do wonder at what point does GTA have to be profitable enough to keep investors from saying "Now we're worth some change, come on EA". Does GTA have to do "X" sales to save the company or is that a foregone conclusion?
LaughingTarget @ Apr 22nd 2008 4:09PM
At best, GTA4 will only provide a temporary boost in stock value. TT doesn't have major releases on the horizon and a takeover will be much more likely post-GTA since TT execs can't point at a major revenue generator to keep shareholders from selling.
Mr Khan @ Apr 22nd 2008 4:56PM
You've got it, LaughingTarget, probably by January of next year, coming down off the GTAIV high, TakeTwo investors will bolt the rollercoaster for a financial sure-thing
GIMcFly @ Apr 22nd 2008 4:01PM
The worst part of this whole thing is that legally it isn't a monopoly on sports games. Other companies can make sports games...they just can't make games with the NFL teams and players (MLB also if this acquisition takes place).
Taking over Take 2 will definately cut out the competition. But it still isn't a monopoly due to the fact that there are other game makers out there that can make sports games as well. Let's hope that this (take over) doesn't happen because so far it seems Take 2 are the only ones that have the marbles to stand against money-blotted EA.
Zootittles @ Apr 22nd 2008 4:01PM
Eat 2? Eat 2 what?
hvnlysoldr @ Apr 22nd 2008 4:09PM
So that's the money pot.
Jason @ Apr 22nd 2008 4:12PM
Two huge problems with this article:
1. Rockstar's contract with T2I is up in the near future. EA buying out T2I will have little to do with GTA, and I can't imagine Rockstar would sign on with EA if they had any intentions of changing things.
2. EA didn't solicit the NFL in response to NFL 2K. The NFL went to EA and offered an exclusive contract. If EA had turned it down, the NFL would have went to T2I with the same deal, and all the fanboys would be deriding T2I for their business practices. The only petty move made at the time was T2I going after the MLB license and getting one that served absolutely no purpose but to keep EA out of it.
HurricaneJesus @ Apr 22nd 2008 11:21PM
Ea lobbied the NFL for years for them to give up exclusive rights. Before that the NFL was happy to license to all who were interested.
Ben Dejo @ Apr 22nd 2008 4:18PM
As a gamer and a law student Im giddy with anticipation.
Maybe well get to an anti trust lawsuit over exclusive control of a genre of an entertainment medium.
My hearts all aflutter.
WAKY0701 @ Apr 22nd 2008 4:49PM
I miss NFL 2K so bad, 2K5 easily destroyed madden that year and to this day it feels more balanced than any of the madden garbage i ever played.
used to be a die hard madden fan
misses competition
Tim Burns @ Apr 22nd 2008 5:14PM
Your article conflicts with history. It was the NFL that looked for an exclusive licensee because of the $20 fiasco by Take 2. EA didn't do anything different than they had done for almost a decade, it was the NFL that changed. Take 2's promotional methods created strict competition between NFL products and ended with the NFL product becoming a $20 budget title, weakening the overall product value in the NFL's eyes.
After years of denying to give exclusive licenses, the NFL suddenly had a change of heart and opened up the bidding for the exclusive NFL license, something Take 2 submitted a bid for and lost.
It's Take 2 that forced an exclusive NFL license by doing what they do best, mismanaging their company and brands, and EA shouldn't be blamed for being the ones who put in the highest bid when Take 2's foolishness caught up with them.
DudeGuyMan @ Apr 22nd 2008 6:25PM
Good on you for finally bringing up the sports perspective on this! I can't believe all the clowns saying this is good for Take 2. A complete sports monopoly? I hope the deal gets shot down as anti-competitive.
Sy @ Apr 22nd 2008 6:49PM
Ah EA, you gigantic cancer on the underbelly of modern gaming. Once upon a time awesome games such as desert strike and road rash existed back when EA cared about games. Now its all about money, profits and who can afford the most expensive wine amongst the greedy shareholders.
Now dont get me wrong, EA up until recently did still make decent games, Need for Speed anyone? Undergound, good, U2 getting better, Most Wanted is where the series peaked i think and carbon suffered a little... and then it ended. I know Pro Street is supposed to be more realistic, but oh em muthafuggin G... how the hell did EA mess up such an awesome series with such shoddy controls? Fat cat annual release demands me thinks.
Long story short, even when games such as Army of Two come out and are generally ok to good, i still wont buy them or want to play em. I cant believe i asked for Pro Street for christmas either, never again. I know i haven't covered the topic here much, but i keep seeing these EA attempt buyouts of T2 stories and needed to get this off my chest.
EA, pull your thumbs out of your rears and start making games for the sake of making them awesome or quit altogether.
theboy @ Apr 22nd 2008 8:02PM
You and Jason have posts worth reading. Why? Because its more than just blind-know-nothing-otaku-we-hate-EA-bullcrap. It's always a wonderful feeling that there are still people out there who make judgements by what is ACTUALLY GOING ON and not what people THINK THEY KNOW BUT IS WRONG.
theboy @ Apr 22nd 2008 8:06PM
Actually, that reply was meant for Tim Burns. Although Sy, I can sympathize with what you're saying, but I feel that no matter who makes a good game, whether it be the much hated EA or the mediocre-but-greatly-praised activision, or if by some miracle of god Midway ever makes a good game - A good game is a good game and is worth playing.
Nguyen @ Apr 22nd 2008 7:14PM
So how should we take "EA" and make it represent greedy bastards? We've all use M$ to talk about microsoft... how about $A? Not obviously EA enough? How about the whole thing: Electronic Art$?
Creidim @ Apr 23rd 2008 9:29AM
I think to properly denote the greed level, you'd use €A since the Euro is worth more :)
Brian Jarrett @ Apr 22nd 2008 8:29PM
Just so you people know. More then 70% of original share holders accepted the tender offer. I wonder who owns those shares now.
shaoron @ Apr 22nd 2008 8:47PM
EA SCREWED CnC FRANCHISE!
BRING BACK WESTWOOD!
Demaar @ Apr 22nd 2008 8:50PM
lol most of the EA games you enjoy were acquired via take overs... this bodes ill for gamers.
ZippyDSMlee @ Apr 22nd 2008 9:14PM
Besides damaging sports gernes they would damage or try to anything eklse 2K makes because EA has trouble with not screwing over game titles...
jspeed04 @ Apr 22nd 2008 9:24PM
Thank you joystiq for recognizing how bad this would be for gamers who enjoy sports games, rather than JUST GTA (I capitalize just because I cannot wait for GTA IV). I too believe that 2K Sports is the main reason that EA is after TTwo, attempting to consolidate the sports genre. It's really unfortunate though because maybe EA could be better for TTwo, you know, help them turn a profit and what not, but in the back of my mind, I know that they would refuse to try and fix their own line of sports games by integrating devs from 2K Sports, and for that reason, I hope to god that EA does not get their hands on the TTwo
HB96st @ Apr 22nd 2008 10:17PM
I've said it before in a previous comment.... EA could care less about GTA... THEY WANT COMPLETE CONTROL OVER SPORTS!! and if T2 sells, it's over for Sports gaming. It will become more watered down year after year. At least Stern of the NBA was smart enough to not fall for the $'s from ea.
I know some of ya'll don't play sports games, but ya'll need to be just as concerned..
Zeus.:God @ Apr 22nd 2008 10:24PM
Dennis McCauley? Meet me, Stephen McCauley. We're related.
HB96st @ Apr 22nd 2008 10:25PM
I wrote this in feb..
"Y'know, not hatin' on Sony.. but I would rather M$ with T2 than EA.. That would be death to sports games as we know it.. Paying for sneaker downloads for NBA?? How about Paying for Animations in Madden?? Or just mediocre sports games period??"
and..
"THIS is Crazy... EA would "Force us" to buy their sports titles because they would basically be the ONLY SPORTS TITLES ON THE MARKET!! I would be forced to stop playing sports games!
This is bad news for ALL GAMERS if EA buys T2!!"
This is the REAL news on ea taking over T2.. It begs the question: Does the powers that be over at T2 even care about Games and Gamers anymore?? Are they just really waiting for that big payoff??
Jason @ Apr 23rd 2008 2:30AM
If EA does manage the takeover, I think the impact on sports gaming is being overstated. Currently, as far as I'm aware, the NBA and NHL don't have any exclusive deals. So even if NBA 2Kx and NHL 2Kx are eliminated by EA, there's nothing stopping someone else from making a title to compete. With the NFL, Madden would obviously still be EA's title, but we can always hope they'd take advantage of their new 2K Sports employees and improve the damned thing. MLB would hopefully see the greatest benefit of an EA takeover, with a return of the MVP franchise.
Bottom line: The 08-09 seasons for the NHL and NBA would likely be lost, but there wouldn't be anything preventing new competitors the year after. The NFL wouldn't be any different than it is now, and MLB might actually see a benefit.
Goatz @ Apr 23rd 2008 3:17AM
Madden has been dead to me for years. EA is a bunch of 'if we can't do it right, lets buy someone who can and then turn them into shit brick makers too and repeat the process' fruits.
HB96st @ Apr 23rd 2008 6:56AM
@Jason:
Who's gonna make a new NBA game?? Who?
Baseball and Football Would be solely owned by ea (third party)
Who's to say ea is not after the NHL license?
I personally think you like ea.. ea Monopolizing sports isn't BAD?? The impact is overstated?? Yeah, Right.... who is this really?? MOORE?
Dr. Doom @ Apr 23rd 2008 8:52AM
"But let's hope it ends badly for EA." .... that's right, and once bad things happen to EA, let's all hope bad things happen to Microsoft, cause they're big business too, and Sony and Nintendo, then let's root for all big businesses to fold so our banks will go under because of the massive withdrawl of funds that big business would have to do with banks and then at which point we're all thrown in poverty let's import all of the 3rd world here so we can drag ourselves even deeper in a pit.
No one on joystiq or these forums has a business degree do they?
We're just all sitting around clueless right?